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TMI Blog2015 (10) TMI 2847X X X X Extracts X X X X X X X X Extracts X X X X ..... ure Requirements) Regulations, 2009 ("the ICDR Regulations"). In order to protect the investors who have subscribed to the impugned offer and issue of RPS and to ensure that the Company and its directors are restrained from carrying on with their fund mobilizing activity, SEBI had issued the following directions: 17. "In view of the foregoing, I, in exercise of powers conferred upon me under Sections 11(1), 11 (4), 11A and 11B of the SEBI Act and Clause 17 of the DIP Guidelines read with Regulation 111 of the ICDR Regulations, 2009, hereby issue the following directions: a) SURAKSHA AGROTECH shall not mobilize any further funds from investors through the issue of RPS or through the issue of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further orders; b) SURAKSHA AGROTECH (CIN- U01400WB2008PLC130787; PAN- AAMCS7720G) and its past and present Directors viz. Shri Ranjit Daspattanayak (DIN - 02821903; PAN - AKDPD9098A), Shri Barun Kumar Nandi (DIN - 00566937; PAN - ABFPN4182J), Shri Indranil Das (DIN- 00566904; PAN -AFTPD7822F), Shri Arunabha Mukhopadhyay (DIN-00566929; PAN- AEYPM2888 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors. The Company submitted that it has already started making payments to the investors and that it can submit documentary evidence of payments made to investors. Regarding submission of Annual Accounts and Balance Sheet for 2012-2013 and 2013-2014, the Company informed that the same would be sent at the earliest. The Company queried whether it should approach the Calcutta Stock Exchange ("CSE") for listing of its shares. 4. One of the noticees, Mr. Akhil Chandra Saha, vide his undated letter (received in SEBI on January 12, 2015) inter alia submitted that - (a) He was associated with a leading public sector insurance company for over 27 years and relinquished office in 2005. (b) In the year 2007, he was approached by Late P.C. Das and Mr. Arunabha Mukhopadhyay of 'Suraksha Family Services' to promote mediclaim insurance and became associated with them for the said assignment. In view of the then prevailing IRDA regulations, the promotion of mediclaim insurance was discontinued. (c) Thereafter, Mr. Arunabha Mukhopadhyay, the Managing Director of the Company advised the noticee to take care and oversee their dairy projects. The noticee took initiative in holding discussions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he was associated with the Company for 7 months from January 2010 to August 2010 and hardly knew anything that they were working as a share trading and corporate agent of Birla Sun Life. The noticee tendered his resignation on August 18, 2010, however, the Company sent Form-32 to RoC only on September 01, 2010. He stated "I shall be obliged to delete my name as a director from the above company considering the fact stated above". (b) Noticee, Barun Kumar Nandi appeared and filed his letter dated April 21, 2015 enclosing copies of his resignation letter and Form-32. The noticee submitted that he has no connection with the above stated company since March 2009 as he had resigned. However, the Company accepted his resignation only after a year of his resignation. The noticee had not taken any remuneration, perks or any financial benefit from the Company as a director. The noticee alleged that his name was used only as a director of the Company. He did not attend any Board meetings/EGMs. He had accepted to be a director due to his friendship with Late Paresh Chandra Das, father of Indranil Das (Director). The noticee had resigned after the death of Mr. Paresh Chandra Das. The noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 30/04/2009 -Do- 5200 7 2,60,000.00 02/05/2009 -Do- 30590 158 15,29,500.00 01/06/2009 -Do- 39930 193 19,96,500.00 01/07/2009 -Do- 35965 193 17,98,250.00 2009-10 01/08/2009 -Do- 48110 217 24,05,500.00 01/09/2009 -Do- 43292 221 21,64,600.00 01/10/2009 -Do- 34150 221 17,07,500.00 01/11/2009 -Do- 72313 372 36,15,650.00 01/12/2009 -Do- 48738 253 24,36,900.00 01/01/2010 -Do- 52330 269 26,16,500.00 01/02/2010 -Do- 53044 305 26,52,200.00 Total in 2009-10 496082 2534 2,48,04,100.00 Year Date of allotment Type of Security No of securities No. of persons to whom issued(approx) Total Amount (Rs) 01/04/2010 Preference shares of Rs. 10/ with premium Rs. 40/- 109078 561 54,53,900.00 02/05/2010 -Do- 58864 331 29,43,200.00 01/06/2010 -Do- 79024 432 39,51,200.00 01/07/2010 -Do- 96751 547 48,37,550.00 01/08/2010 -Do- 108374 590 54,18,700.00 01/09/2010 -Do- 108834 590 54,41,700.00 01/10/2010 -Do- 118812 639 59,40,600.00 2010-11 01/11/2010 -Do- 144702 843 72,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offer or invitation can properly be regarded, in all circumstances - (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation ; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation. More importantly, in terms of the first proviso to the aforesaid section, the provisions of section 67(3) shall not apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more. Therefore, the number of subscribers becomes relevant to judge whether an issue of shares are for public or on a private placement basis, in the light of the above said provision. Therefore, if an offer of securities are made to fifty or more persons, it would be deemed to be a public issue. 9. The Hon'ble Supreme Court of India in the matter of Sahara India Real Estate Corporation Limited & Others vs. SEBI and another (Civil Appeal Nos. 9813 and 9833 of 2011 ; decided on August 31, 2012) ("the Sahara case") had inter alia held that - "Section 67(1) deals with the offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 4A of the Companies Act, 1956 to be covered under the second proviso to section 67(3) of the Companies Act, 1956. Therefore, considering the number of persons from whom monies were mobilized by the Company by issuing RPSs, which is definitely more than 49 persons, it can be concluded that the Company had made a public issue of RPS in terms of the first proviso to section 67(3) of the Companies Act, 1956. Further, the manner of making such offer and issuance of RPS adopted by the Company (i.e., series of allotments made consistently every month) can be definitely held to be a ploy employed by the Company to circumvent the provisions of the first proviso to section 67(3) of the Companies Act, 1956. 11. By making a public issue of RPS, as discussed above, the Company was mandated to comply with all the legal provisions that govern and regulate public issue of such securities, including the Companies Act, 1956 and the SEBI Act and regulations. In this context, I refer and rely on the below mentioned observation made by the Hon'ble Supreme Court of India in the matter of Sahara: ... ... that any share or debenture issue beyond forty nine persons, would be a public issue at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money". As the Company failed to make an application for listing such RPS, the Company had to forthwith repay such money collected from investors. If such repayments are not made within 8 days after the Company becomes liable to repay, the Company and every director of the Company is liable to repay with interest. Considering that the mobilization commenced during 2009-2010, it would be appropriate to levy an interest @ 15% p.a. as provided for under the above section. Further, the liability of the Company to refund the public funds collected through the offer and allotment of the impugned RPS is a continuing liability and such liability would continue till repayments are made. The Company has also not complied with the provisions of section 73(3) as it has not kept the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DIP Guidelines. In this regard, the following provisions of the DIP Guidelines are supposed to be complied with by any company making a public issue of securities: a. Clause 2.1.1. - (Filing of offer document) b. Clause 2.1.4 - (Application for listing) c. Clause 2.1.5 - (Issue of securities in dematerialized form), d. Clause 2.8 - (Means of finance), e. Clause 4.1 - (Promoters contribution in a public issue by unlisted companies), f. Clause 4.11 - (Lock-in of minimum specified promoters contribution in public issues), g. Clause 4.14 - (Lock-In of pre-issue share capital of an unlisted company) h. Clause 5.3.1 - (Memorandum of understanding), i. Clause 5.3.3 - (Due Diligence Certificate) j. Clause 5.3.5 - (Undertaking), k. Clause 5.3.6 - (List Of Promoters Group And Other Details), l. Clause 5.4 - (Appointment of intermediaries) m. Clause 5.6 - (Offer document to be made public) n. Clause 5.6A - (Pre-issue Advertisement) o. Clause 5.7 - (Despatch of issue material) p. Clause 5.8 - (No complaints certificate) q. Clause 5.9 - (Mandatory collection centres including Clause 5.9.1 (Minimum number of collection centres) r. Clause 5.10 - (Authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and observations, I conclude that the Company did not comply with the public issue norms mandated under sections 56, 60 and 73 of the Companies Act, 1956 read with the Companies Act, 2013 and the DIP Guidelines read with the ICDR Regulations in respect of its offer and issue of RPS made during the financial years 2009-2010, 2010-2011 and 2011-2012. The Company is therefore liable for appropriate regulatory action. 13. The interim order had issued directions with respect to the following present and past directors of the Company - a) Mr. Ranjit Daspattanayak, b) Mr. Barun Kumar Nandi, c) Mr. Indranil Das, d) Mr. Arunabha Mukhopadhyay, e) Mr. Akhil Chandra Saha, and f) Mr. Subrata Das. My observations and findings in this regard are as below: (a) The Company has violated the public issue norms mandated under sections 56, 60 and 73 of the Companies Act, 1956 read with the Companies Act, 2013 and the DIP Guidelines read with the ICDR Regulations in respect of its offer and issue of RPS made during the financial years 2009-2010, 2010-2011 and 2011-2012. (b) Section 56(1) and 56(3) read with section 56(4) imposes liability for the compliance of the said provisions, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolations and are also responsible, jointly and severally, for making refunds to investors as mandated under section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act and the DIP Guidelines. (g) Mr. Ranjit Daspattanayak had submitted that he was director in the Company from January 18, 2010 to August 18, 2010. However, as per Form-32 and information from the RoC (i.e. Register of directors, managing directors, manager and secretary etc.), the date of his cessation as director was on September 01, 2010. As this noticee was a director during FY 2009-2010 and 2010-2011 when the RPSs were offered and issued without complying with the public issue norms, he also becomes liable for the violations committed by the Company. This noticee is also liable, jointly and severally, for making refunds to investors as mandated under section 73(2) of the Companies Act, 1956 and section 27 of the SEBI Act and the DIP Guidelines. The submission that he was not aware of the Company's business would not absolve this noticee of the responsibility and liability. (h) Noticee, Barun Kumar Nandi has also contended that he has no connection with the Company since March 2009. Though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elines. In view of the above observations, I hereby conclude that the aforesaid 6 persons (present and past directors) are liable for the violations committed by the Company as found in this Order and also liable for making refunds under section 73(2) of the Companies Act, 1956 read with section 27 of the SEBI Act and the DIP Guidelines. 14. I also note that the interim order had inter alia directed the noticees to provide relevant and necessary information, as sought vide SEBI letters dated July 26, 2013 and February 05, 2014. Though the Company, vide letter dated August 14, 2013, sought extension of twenty days to furnish the information/ documents, it failed to do so. Thereafter, a reminder was sent vide SEBI letter dated February 05, 2014 to the registered office as well as the head office of the Company. However, these letters were returned undelivered. As on date, the Company failed to submit information/documents as directed in the interim order. 15. In view of the above findings and observations, it becomes necessary to issue directions for refund against the Company and its directors and other directions in the interest of investors and the securities market. For the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India ("ICAI"). (f) The Company, its directors and former directors are also directed to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form. (g) In case of failure of the Company and persons mentioned in sub-paragraph (a) above in complying with the aforesaid directions, SEBI, on the expiry of the three months period from the date of this order, - a) shall recover such amounts in accordance with section 28A of the SEBI Act including such other provisions contained in securities laws. b) may initiate appropriate action against the Company, its promoters/ directors and the persons/ officers who are in default, including adjudication proceedings against them, in accordance with law. c) would make a reference to the State Government/ Local Police to register a civil/ criminal case against the Company, its promoters, directors and its managers/ persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach ..... X X X X Extracts X X X X X X X X Extracts X X X X
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